report on programme manipulation - Independent Inquiry Committee

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INDEPENDENT INQUIRY COMMITTEE INTO THE UNITED NATIONS OIL-FOR-FOOD PROGRAMME REPORT ON PROGRAMME MANIPULATION CHAPTER TWO OIL TRANSACTIONS AND ILLICIT PAYMENTS When Mr. Majali requested oil in Baghdad, there was $464,000 due in outstanding surcharges that had not been paid on the Montega Trading oil contract in Phase IX. In letters to the Ministry of Oil, Mr. Majali promised to settle this debt in two installments with the proceeds from the sale of the crude oil that he hoped to get from Iraq. In early March 2002, SOMO confirmed that Imvume had been allocated two million barrels of oil. The Iraqi Ambassador to South Africa’s March 7, 2002 cover letter to Mr. Aziz states that it included a letter to Mr. Aziz from Mr. Motlanthe. The Committee was unable to obtain a copy of the letter to Mr. Aziz, but the cover letter also contains the following handwritten note to the Director of SOMO: “obtained the permission of the Vice President of the Republic and Deputy Prime Minister Mr. Aziz for allocation of 2 million barrels” and “the amount requested by Mr. Sani Majali [sic]).” 211 Because of the problems with outstanding surcharge debts, SOMO required Mr. Majali to provide a written undertaking of his surcharge obligation: agreement (Mar. 6, 2002); Glencore letter to SFF (Jan. 23, 2002); Dr. Mokate letter to Imvume (Jan. 23, 2002); Goodfellow letter to Dr. Mokate (Mar. 8, 2002). 211 Sandi Majali letter to Ali Hassan Rajab (Feb. 26, 2002); Sandi Majali letter to Amer Rashid (undated) (bearing stamp, “Ministry of Oil, Minister’s Office June 19, 2002”) (translated from Arabic); South Africa Ambassador letter to Tariq Aziz (Mar. 7, 2002) (translated from Arabic) (referencing an attached letter from Kgalema Motlanthe, which the Committee was unable to obtain); SOMO sales contract, no. M/11/72 (Mar. 27, 2002) (contracting with Imvume Management). The letter from Ambassador Al-Omar to Mr. Aziz accompanied a sealed envelope to be delivered to Mr. Aziz. Iraq official interview. REPORT ON PROGRAMME MANIPULATION–OCTOBER 27, 2005 PAGE 110 OF 623
INDEPENDENT INQUIRY COMMITTEE INTO THE UNITED NATIONS OIL-FOR-FOOD PROGRAMME REPORT ON PROGRAMME MANIPULATION CHAPTER TWO OIL TRANSACTIONS AND ILLICIT PAYMENTS Figure: Sandi Majali letter to SOMO (undated). In the letter, Mr. Majali explicitly represented that he would “undertake to perform my obligation accordingly [sic] to SOMO’s requirements regarding the return money (i.e., US $0.30/BBL) for US destination or ($0.25/BBL) for Far East destination for the quantity of 2.0 million barrels.” Although the letter is undated, the surcharge rates are those imposed during the majority of the surcharge phases. 212 Ultimately, Imvume did not sell the oil under its SOMO contract (M/11/72) to fulfill its obligation to supply oil to SFF. Imvume had Glencore purchase four million barrels from two Russian companies for shipping to South Africa. 213 212 Sandi Majali letter to SOMO (undated) (agreeing to pay surcharges). 213 Sandi Majali interview (June 30, 2005). Only two shipments of Iraqi oil were shipped to South Africa during this phase. SOMO sales contract, no. M/11/103 (Feb. 5, 2002) (contracting with Joint Stock Company (“JSC”) Slavneft); Roman A. Ivanov letter to oil overseers (Mar. 14. 2002); Oil overseers letter to JSC Slavneft, S/AC.25/2002/OIL/1382/OC.93/add.1 (Mar. 18, 2002); SOMO sales contract, no. M/11/79 (Jan. 16, 2002) (contracting with Machinoimport). REPORT ON PROGRAMME MANIPULATION–OCTOBER 27, 2005 PAGE 111 OF 623
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report on programme manipulation - Independent Inquiry Committee

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